Q3 2024 Earnings Summary
- Expected Increased Contribution from AI Services in 2025: Getty Images anticipates that AI services will become a more material contributor to the business over 2025, as they continue to integrate AI capabilities into their platforms and roll out new product features like the recently launched ability to insert product-based imagery into pre-shot imagery using AI. This not only attracts new customers but also provides opportunities to cross-sell existing offerings.
- Incremental Adoption of AI Capabilities by New Customers: The company is seeing adoption of its generative AI packages from new customers who have not been traditional users of their brands or pre-shot offerings. This expansion of the customer base is a positive sign for future revenue growth.
- Strategic Expansion in Data Licensing Opportunities: Getty Images plans to continue expanding its data licensing, focusing on deals that are highly accretive to the business and align with the interests of the company and its creators. This strategic approach could lead to additional revenue streams and long-term growth.
- The uptake of Getty Images' generative AI services is currently low, with only single-digit percentages of customers adopting these capabilities, indicating that AI initiatives may not significantly contribute to revenue growth in the near term.
- The company acknowledged that deals like the Venom movie promotion are not recurring in nature, suggesting that certain AI-related revenue sources may be inconsistent and not provide a stable revenue stream.
- Getty Images has passed on a large number of data licensing deals that do not align with their long-term interests, potentially missing out on immediate revenue opportunities in the growing AI and data licensing market.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Guidance | FY 2024 | $924 million to $943 million, growth 0.9% to 2.9% | $934 million to $943 million, growth 1.9% to 2.9% (reported) or 1.6% to 2.6% (currency-neutral) | raised |
Adjusted EBITDA Guidance | FY 2024 | $290 million to $294 million, decline 3.8% to 2.5% (or 3.6% to 2.3% currency-neutral) | $292 million to $294 million, decline 3.1% to 2.5% (or 3.4% to 2.8% currency-neutral) | raised |
FX Assumptions | FY 2024 | Euro: 1.08, GBP: 1.29 | Euro: 1.09, GBP: 1.31 | raised |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Generative AI | In Q4 2023, it was discussed as an early-stage initiative with limited immediate contribution. In Q1 2024, the narrative focused on modest contributions with strong future potential through expanded offerings and custom fine-tuning. Q2 2024 emphasized early adoption with positive customer feedback and product updates. | Q3 2024 saw Generative AI integrated into websites with single-digit customer adoption, while the company expects it to become a material contributor in 2025. | Evolving sentiment: Shift from early, limited impact to strong future growth expectations. |
Decline in Agency Business | Q4 2023 noted a mid‐single-digit decline and a slight rebound. Q1 2024 and Q2 2024 repeatedly cited double-digit declines, driven by factors like the Hollywood strikes and weaker performance among smaller agencies. | In Q3 2024, the agency business reported a turnaround with a 5% year-on-year increase, marking a break in 12 consecutive quarters of decline. | Reversal: Transition from persistent declines to renewed growth. |
Subscription Revenue Dynamics | Q4 2023 highlighted strong subscriber growth, retention pressures, and upsell opportunities (e.g., improved video attachment rates). Q1 2024 and Q2 2024 similarly focused on robust subscriber expansion, while noting retention challenges due to factors like smaller e-commerce subscribers and strike impacts. | Q3 2024 continued to show robust subscriber growth (96K new active annual subscribers) with improved video attachment rates rising from 13.7% to 16.4% and relatively stable retention at 92.2%. | Consistent with challenges: Sustained strong growth and upsell potential amid ongoing retention hurdles. |
Data Licensing Opportunities | Q4 2023 described a deliberate choice to focus on building AI services rather than licensing data for one-time deals. Q2 2024 discussed entering the market via partnership models for recurring revenue, while Q1 2024 did not mention this topic. | Q3 2024 reaffirmed small data licensing deals with long-term partners, maintaining the strategic commitment to leverage quality content and metadata in AI applications. | Maintained focus: Continuation of a strategic approach aimed at recurring revenue rather than one-off licensing deals. |
Video Upsell Strategy | Q1 2024 discussed a video upsell strategy with a flat quarterly performance but with a trailing 12-month attach rate improvement to 14%, emphasizing long-term upsell opportunities despite some customers not yet enabled for video. Q2 and Q4 2023 did not contain detailed updates on this topic. | Q3 2024 noted an improved video attachment rate rising to 16.4% from 13.7% compared to the prior period, signaling incremental growth and future upsell potential despite earlier mixed performance. | Positive incremental change: Gradual improvement indicating growing momentum for video upsell opportunities. |
Macro-Economic and Event-Driven Influences | Q4 2023 highlighted the adverse effects of Hollywood strikes on editorial and agency segments along with cautious customer spending and expectations from major events like the Olympics and U.S. elections. Q1 2024 and Q2 2024 observed continued strike impacts and mixed outcomes from event-driven factors. | Q3 2024 saw a softening of Hollywood strike effects with editorial revenue rebounding (16%+ growth) and positive contributions from major events like the Paris Olympics and election-driven demand. | Shifting sentiment: Movement from negative strike impacts to positive, event-driven growth as conditions improve. |
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GenAI Adoption
Q: Update on GenAI adoption and scaling in '25?
A: The company is integrating GenAI services into its websites, including stand-alone generative models and AI tools to modify pre-shot creative. Adoption is still in the single-digit percentages of customers, but they expect this to grow and be additive to the business over 2025, becoming a more material contributor. New customers drawn by GenAI are providing cross-selling opportunities for pre-shot offerings. -
Data Licensing Opportunities
Q: Update on data licensing demand and competitive considerations?
A: The company has completed small data licensing deals in Q2 and Q3 with existing long-standing partners. They are selective, passing on many deals that don't align with the long-term interests of the company and creators. They plan to expand data licensing with a long-term view, aiming for deals that are highly accretive to the business and align with creators' interests.
Research analysts covering Getty Images Holdings.